How does Retirement Planning and Investing Change for Singles?

“Education is the passport to the future, for tomorrow belongs to those who prepare for it today.” – Malcolm X


As the years pass by, time becomes a valuable tool that many wish could be purchased. Educating oneself with financial basics is instrumental to planning ahead for the future. Retirement for single people is especially important due to the many added factors that must be considered. Retirement planning and investing for singles requires additional protective measures such as making sure to draw out a will or having a power of attorney. Unfortunately, todays world is heavily geared towards family life, and so most of the financial literature available will also be geared to retirement planning when you have children or other family members to factor in. We will be taking a further look into retirement and investing for singles, and pointing out important details to take into consideration as you plan for your future.


retirement investing for single people


Time – Let your money grow

One of the most crucial factors in retirement planning is time. This is one of the few similarities for single and married individuals. It is important to have a vision early on and to sit down with a financial professional to have a better monetary idea of where you are today and how you imagine your retirement lifestyle. The following is a simple scenario that shows you how valuable time can be for you and your financial goals:


Person A 

–> Begins maxing out their Roth IRA (current maximum yearly contribution is $5,500 and current average market return for the S&P 500 is 7.0%) at age 25 and plans to retire at age 65.

At age 65, $220,000 ($5,500 x 40 years) that was self-invested over forty years has become $1,097,993.

Person B

–> Begins maxing out their Roth IRA just eight years after Person A, at age 33 and plans to retire at the same age.

At the age of 65, the $176,000 ($5,500 x 32 years) that was self-invested over thirty-two years has become $606,200.


The only difference in money self-invested was $44,000 over eight years but led to a difference of roughly $400,000 for retirement!

Investing for singles is especially important as you are relying solely on one income and your most valuable tool in this instance is time. Make it a goal to start early!


Budgeting & Saving

The cost of living for single people is 40%-50% higher than that of married people. For this reason, it is very important to create a budget and make a habit out of saving. The easiest way to visually see where your money is going is save your receipts for a full month. There are also phone apps available to track your spending but having physical receipts to include cash transactions is important. Once you become aware of where your finances are going, you can assess where you may be over-spending and create a budget for that category. Being aware of where your finances are going is a very important step which will lead to wise decisions for retirement and investing decisions later on. Make it a goal to save 10% of each paycheck and increase this rate if possible over the next few years.


Importance of a Safety Nest for Singles

The recommended amount for a safety nest in case of emergency purposes is 3-6 months’ worth of living expenses. In today’s economy, it is preferred to have 6-12 months’ worth of living expenses. It is also very important for singles to have disability insurance in case of a setback. Without a second person’s income to rely on, your retirement or investments could be drained rather quickly.

Will & Power of Attorney

When single people plan for retirement, it is very essential to draw out a will alongside any financial investing that one does. Leaving behind an inheritance without a will can be a mess for families to sort out, and even more chaotic when there are no obvious aires such as children or spouses. It is much easier to leave this settled beforehand to your choice of appropriate beneficiaries. Also, assuming that there are no children or immediate relatives to handle your assets and will, it is also especially important to appoint a power of attorney that you trust can handle these situations, in case of an emergency.

These are things that many people wait far to long to consider and setup. As soon as you’ve began investing any amount of finances, you should be looking to get a will written and a power of attorney chosen.


Are Annuities Safe Investments for Singles & Annuity Riders

When going over your retirement planning with a financial advisor, you may be advised to consider annuities with an annuity rider. A retirement annuity is a tax effective retirement investment that can vary on their payout based on if it is fixed, variable or indexed. Annuity riders are added benefits to a basic annuity and may sound enticing but can cost 0.1% to 1% of the annuity’s value per year. For single people, riders can allow you to customize an annuity to best suit your future.

Retirement annuities should never be considered as your sole income for retirement. There are advantages and disadvantages that one must consider before proceeding in purchasing an annuity and it is important to do your research as well as consult with an experienced annuity advisor. Annuities are best to be thought of as a supplemental income alongside a Roth IRA and 401K.


Retirement Planning and Investing for Singles doesn’t have to be complicated

There’s lots of information in the world today that can help guide you through planning for retirement, but just be sure that if you are a single adult that you speak to a financial expert that will help dot your ‘I’s and cross your ‘T’s. That way nothing will get missed and you can relax knowing all your assets will be handled as you wish.